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The case of Queensland Blue Steel Ltd and Shanghai Hotel Group

Shanghai Hotel Group a leading constructor of hotel entered into a contract with Queensland Blue steel company for the steel company to supply steel to it. Blue steel company was chosen to supply exterior steel panel that were to be used for attachment of clear glass. The contract between the two companies specified that Queensland Blue steel company was to supply the steel in six types of steel in six batched between 1 July and 1 December. However, a number of delays from both parties to the contract led to delayed payments as well as late delivery of steel with some not conforming to the standards as per the contract. Subsequently, Shanghai Hotel group incurred losses from this occurrence totaling to $ 240, 000.

Applicable law to the above contract

From the scenario depicted above in the case of the contract between Shanghai Hotel Group and Queensland Blue Steel Company, the applicable law is the law contract. A contract ordinarily implies an agreement amongst two or more persons not just a shared belief, but a mutual understanding as to something that is to be done in the time to come by one or both of the parties (Knapp, Crystal & Prince 2003 , p. 15 ).  Form the agreement stated in the case, it is evident that the tow companies entered into a contract which binds both parties (Oughton & Davis 2000, p. 1).

The reason as to why the law applies is due to the nature of agreement that transpired between Shanghai Hotel Group and Queensland Blue steel Company concerning the delivery and payment of the steel panels that were to be used by Shanghai Hotel Group in building hotels for its clients. As Crawford, Coleman and Gaines (p. 20 7) confirm, a valid contract is one that both parties to the contract have mutual accent where an offer is made by one party and the offer is accepted by the other. During this contract to supply steel, an offer was made by the Queensland Blue Steel and it was accepted by the Shanghai Hotel Group who agreed to make payments for the delivery. As a result, the law that will be applied to this case will be the law of contract.

There are a number of legal remedies that can be pursued by both parties regarding the contract that they undertook between one another. While Queensland Blue Steel Ltd may have failed to deliver the required steel in time and in the right number and specification, Shanghai Hotel Group also failed to make some payment in time. This led to losses to both parties where Shanghai Hotel Group failed to make prompt payments while the Queensland Blue Steel Ltd failed to deliver the steel panels as expected. Schaffer et al (2009, p. 162) believe that these risk fall under delivery risk and payment risks which breaches contracts.  

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The most common remedy that can be used to solve cases of breach of contract is through the use damages.  Both parties can pursue Un-liquidated damages against in another. These damages will be evaluated by the court as they are planned to recompense the innocent party in a contract for any losses that may result in the breach of a contract (Campbell 2005, p.33). In this case, both parties to the contract will have to prove the damages they have incurred failure of which each one of them will be entitled to a nominal charge. Had Shanghai Hotel Group terminated the contract before the delivery of the last consignment, their move would have being justified.

Breach of contract does not warrant any party to the contract to discharge the contract unless when the breach is serious. In this case, the Shanghai Hotel group did incur a lot of losses as compared to what the Queensland Blue Steel Ltd incurred. As a result a move by Shanghai Hotel Group to cancel the contract would imply that the contract comes to an end and both parties to the contract become freed from any future obligation as detailed in the previous contract. As a result of the termination, Queensland Blue Steel Ltd would no longer be obligated to deliver the remaining number of steel panels as earlier agreed.

This case centers on two firms, a Tasmanian exported of apple cider and a Chinese importer. During one of the contracts to supply the Chinese importer with the apple cider, it was discovered that the consignment did not meet the requirement as stipulated by the contract. It was apparent that the imported apple cider had been destroyed with some were stolen in a warehouse. With the case entailing the shipping of ice cider to china, it is likely that the sales agreement between the two parties had a clause on shipping terms. Schaffer (2005, p. 164) contends that shipping terms has provisions that determine the seller's and buyer's obligations for making the transport arrangements, paying transportation fees, securing insurance on the commodities, paying port charges, as well as accepting the risk that the commodities may be turned a loss or spoiled in transit

Applicable law on this case

From the terms contained in the contract, the most suitable law that is applicable to his case is shipping terms which define whether the contract is a destination contract or if it is a shipment contract which further defines the responsibilities of the parties to the contract.

Singapore arbitration clause

In the case depicted by Marks Apple Isle Cider Ltd and Jiang LeMond, the Singapore arbitration clause binds Jiang LeMond thought it is a Chinese firm. In this instance, Jiang LeMond will have to be part of the arbitration process in Singapore in attempt of resolving the problems of shipping between it and Marks Apple Isle Code Ltd. Li and Reuvid (2005, p. 193) affirm that arbitration has emerged as one of the most important form of resolving conflicts between it and foregoing firms especially in venues such as Singapore and Stockholm.  

Liability on stolen goods

With the sales contract not having the clause that addresses the issues of stolen goods, it is much likely that the buyer, Jiang LeMond will take up the losses when the commodities are passed to it from the first carrier to handle the good on transit to China (Schaffer 2009 at p. 177; Bade & Johnson 2010, p. 101). As in all international trade that involve shipping, the buyer will take up all the losses of the good in  a ship as well as other charges that are associated with the handling of goods while on transit. These charges must include those incurred as freight duties, arrival charges and consular fees among other expenses incurred by the carrier (Fisher & Fisher 1998, p. 134.))

The case of Insured containers

Buyers of commodities like Jiang LeMond can insure their goods against any potential loss or damage while on transit. In such cases, the exported must always have an insurable interest in the commodities during the time of the loss in order for the loss to be repaid by the insurer. As a result of damage to insured good during transit, the exporter's first course of action is to inform the insurer of the loss. Any claim of recompense will be however pegged on the basis of the actual loss suffered and thus cannot exceed this amount (Mercurio et al 2010, p.88),

 

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With Kit-Set aimed at cutting cost of its business operations, a move to look for a potential supplier who offers cheaper prices is a welcomed move. However, the fact that the credibility of the new supplier cannot be verified make Kit-set look for means of guarding itself against any eventuality that my result from any fraudulent move by its new supplier. International business between firms like Kit-Set and YDS can pose several challenges regarding the making of payments as well ensuring that contracts are enforced. These challenges can undermine the business operation of any given partners at the international level

Payments and contracts

Whenever firms carry out any business transaction between themselves, payment is one the most fundamental process of sale of commodities or services. The process of sale does not merely commence with the making of payment for good or services. Instead, it starts with elements such as negotiation where parties reach agreement on the price of good as well as mode of delivery for the particular commodities under consideration. The process of sale can also be employed by business partners in solving out any dispute that might have arisen (John Mo 2009, p. 471). 

During the signing of contracts between Kit-Set and YDS, the name of Kit-Set might have been captured wrongly as evidenced by the sale agreement between the two firms where the name of Kit-Set has been recorded as Kit-Set Ltd. This name given in reference to the Kit-Set firm poses a number of serious implications that must be addressed with urgency to avoid potential financial problems that might befall Kit-Set. If the error appeared in a letter of credit instead, the bank would have refused to enter into transaction with the firms whose letter of credit has errors. This is as a result of banks followed the doctrine of strict compliance which necessitates them to consent documents that follow the letter of credit (Burnett & Bath 2009, p. 242).

Shipment prior to receipts

If for some reasons YDS delivers steel to Kit-Set, YDS will be expecting Kit-Set to honor their sales contract and make the payments as required. While commodities such as steel can be delivered to firm like Kit-Set by YDS before payments are received, this is a risky business operation that does not guarantee that payments will be made. In this case, YDS who is exporting will be required to send the steel and accompany the commodities with an invoice necessary for payments to be made by Kit-Set (Cowen 1997, p. 71).  Since Australia is not party to any international convention governing payments, it is less likely that Kit-Set will pay for the good since an option  for making payment is this case is Open accounts which has many risks associated with it (Mayes 2007, p. 52).  In this case, it will be difficult for YDS to enforce payments on Kit-Set but must depend on the integrity of Kit-Set to pay for the steel received from YDS.

Shipment of inferior quality of steel

If by any chance YDS ships steel for Kit-Set which do not conform to the standards in the contract, it would be quite difficult of Kit-Set to follow up on the issue and take up any further action, Instead, it might be easy for Kit-Set to revoke payments made for YDS as a way of demanding of the quality delivery of steel panels. While it may seem that there is no legal step for Kit-Set to follow, the use of standard form contracts by carriers make it easy for terms contained in the terms of sales between the seller and the buyer to be in conformity with the terns that are contained in the standard form contract that are in possession of the carrier. In the case of poor, quality of steel, can seek assistance from ICC Uniform Customs and Practice for Documentary Credits who can help them in recovering their money paid to YDS (John Mo 2009, p. 477).

Forged bill of landing and related documents

A bill of leading refers to a document of title which is an example of is a legal instrument that can be used as an evidence to prove ownership of goods. When goods are in transit, the goods change hands from one buyer to another even while at sea as a result of the bill of lading (Schaffer, Augusti & Earle 2008, p.167). In the case where the bill of lading has been forged as well as other document of ownership, Kit-Set would not be liable for any payments since a bill of lading designate that it must be accompanied with goods that are being transport by a carrier. In this way, the client has to insist on certificate of origin to ascertain the source of the documents.

Kit-Set will be under no obligation to make payments for good that have a forged lading bill since the authentic lading bill serves crucial purpose as it

i) Provides evidence of receipts for the goods receiver from a carrier and indicating where necessary any damage to the goods that may have been visible at the time of loading.

ii) The bill of lading also denotes a contract between the shipper and the carrier as it serves as a transport document

iii) The bill of lading is a document of title to the goods described in it.

Kit- Set will therefore not be liable to make any payment since the document presented is

Forged and do not stand for actual commodities that have been delivered by YDS. This situation removes any liability of Kit-Site may be facing.

The World Trade Organization was instituted to deal with rules of trade between organizations participating in world trade. Nations sign and ratify trade agreements that bind them in relation to the international trade they undertake (Lang, Herdin & Hofbauer 2005, p. 768). The GATT is however the basis of the basis of the multilateral trading system and it deals with trade in goods (Bossche 2005, p.310)

a) The New Zealand Government increases its value-added tax (VAT) from 10% to 15% but rebates it to 10% via the income tax system for local firms. That is, just imports pay the 15% VAT.

The action of the New Zealand government to increase the values added tax from 10 % to 15% does not conform to the obligations of the WTO and GATT. According to the requirements of the WTO, it is necessary for countries that are party to its agreement to be able to remove VAT for goods that are exported for those that have VAT in place. From this move, those that engage in exporting of goods in New Zealand will benefit from paying the VAT added tax which in turn will stimulate more exports while those that import good face the harsh VAT imposed on them.

This will have a positive effect of creating little volume of international trade between New Zealand and its trading partners in terms of importation of goods. A rebate on the other hand provides relieve to the otherwise increased value of VAT only that those who have local firms. As a result, the local firms are strengthened while those businesses that rely on importation of good are restricted due to the VAT imposed on them. This creation of unfavorable playing field does not make New Zealand a country that aligns itself to the international agreements on trade as instituted by WTO/GATT. All export subsidies as the one used in New Zealand are inconsistent with the rules and mandate of the WTO and GATT (United Nations & Economic Commission for Latin America 2004, p. 163).

b) The Australian Government imposes excessively strict quarantine and related phytosanitary measures in order to protect the local industry against cheaper imported Philippine bananas. It is virtually impossible to meet those requirements in a competitive, cost-efficient manner.

The WTO and GATT are organization aimed at removing trade barriers and promoting free trade between different nations of the world.  Many nations have put many barriers to international trade such as the one Depicted in Australia where the government has imposed a strict quarantine to protect the local industries against cheap imports. However, the requirements are very difficult to meet and thus creating more hurdles that curtails the growth of international trade between New Zealand and other potential nations.

The WTO and GATT advocates for removal of such barriers as found in Australia which give much protection to local industries while acting as a blockage against entry of new market players who may are even offering better prices in terms of the commodities being sold. In the case of Australia, it is more likely that the international trade between it and Philippines will be hampered with respect to the sale of banana while the citizenry of Australia will continue to pay more money for local bananas yet there are other cheap alternatives from Philippines. The use of VAT has for a long time remained in use as a unilateral trade barrier (Epping 2001, p.45)

c) To protect its domestic wine producers against cheaper imported "champagne" from Australia and New Zealand, the French Government prohibits champagne imports from these two countries Without payment of a prior annual license fee per exporting firm of US $10,000 and also levies an ad hoc US$ 5 per bottle 'intellectual property rights' fee for using "champagne" on the label. Local French wine producers don't pay any such government fees or charges.

The use of restriction by the French government to protect it Wine industry from cheap importation of wine through the levying of annual license and intellectual rights fee does conform to the principles of WTO or GATT. Sullivan (2003, p.56) confirm that WTO is involved in the enforcement of intellectual property thus the actions of French government is accordance to the principle of WTO regarding the protection of intellectual rights. However, the imposition of US $ 10,000 charge in   Australia and New Zealand is discriminatory and not in conformity with the principles of the WTO and GATT.

d) To stimulate the US economy and demand for new cars, the Obama Government introduces a federally funded "cash for guzzlers" rebate program. It provides a $6,500 federal cash rebate on top of the trade-in price of 10-15 year old fuel-inefficient cars, defined as cars with certified average gas consumption when news of less than 23 miles per gallon. Industry statistics reveal that 85% of 10-15 year old imported cars simply won't qualify since they're more fuel-efficient.

The move by the Barack Obama administration is in line with WTO/GATT obligation of increasing trade among countries like United States with other countries. To begin with, the rebate program will increase demand of new cars which will accelerate the manufacture of such cars. In this case, the United States can import ready made cars or part from abroad thus enhancing international trade. At the same time, the move will improve the use of fossil fuel resource especially petroleum product which is in in line with WTO/GATT obligation and commitment to improvement of world climate.

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